Comedy of errors with supplier visibility

There is something between Shakespeare and the Indian silver screen. For decades, Shakespeare’s works have inspired directors to churn out some of the most memorable hits on the big screen. The perennial favourite theme is based on one of his earliest plays, The Comedy of Errors. The play depicts the story of two sets of identical twins that are separated at birth and later reunite in their youth after being tangled in a series of confusions and twists based on mistaken identities.

Managing an average portfolio comprising thousands of suppliers, supply chain professionals must have witnessed the supplier duplication comedy of errors being played out in their day-to-day work far too often. The only difference in this case is that no one is laughing, says Keertan Rai, Solutions Marketing Manager at Ariba, a SAP Company, in this month’s SmartProcurement.

As the global barriers for business commerce are being torn down, enterprises are offered unparalleled opportunities to create unique advantages within their supply chains. Not surprisingly, sourcing and procurement teams today deal with a supplier base that is more globally diverse than ever before. It is only natural then to assume that supplier visibility initiatives too have kept pace with the change. On the contrary, supply chain managers today are grappling with issues that are either direct or indirect fallout from a lack of comprehensive visibility into their supplier base.

Supplier duplication is just one of the issues. Disproportionate supplier management costs, poor negotiation leverage, lack of supply chain diversity and sustainability are a few more to name. More worryingly, in extreme cases, poor supplier visibility has had far-reaching consequences.

A tragic case in point is the Rana Plaza Building Collapse in Bangladesh. On April 24, 2013, an eight-storied commercial building near Dhaka, which housed several garment factories, came crashing down and claimed the lives of more than a thousand workers while leaving several more injured. Going by the emerging details on the unregulated working conditions of the garment manufacturing supply chain in Bangladesh, this seemed like a disaster in the making for a long time.

Bangladesh today is the second-largest apparel exporter after China and caters to some of the largest brands across the world. It is shocking and scary that supplier visibility on many of such manufacturing outlets even now remains limited.

Gaining in-depth and ongoing visibility into suppliers goes beyond traditional questions like “With whom am I spending?” or “How much am I spending per supplier?” While they serve as great starting points, initiatives to improve negotiation leverage, mitigate supplier risks and optimise supplier base call for advanced supplier intelligence that transcends the realms of existing data within the enterprise.

It is in this context that supplier data enrichment using external sources has assumed a pivotal role in the spend analysis scheme of things. By blending existing supplier information with details on parentage hierarchies, diversity information, financial stability, litigation details, green rating, etc., supplier visibility delivers a slew of action-based insights.

Be it through identifying corporate linkages within suppliers to negotiate better; enabling sourcing strategies with financially stable suppliers; or pre-empting supply chain risks, supplier data enrichment opens up multiple avenues for garnering savings, compliance and risk mitigation. In addition to the insights, well-enriched supplier data is also the stepping stone for driving effectiveness across several supplier performance and risk mitigation initiatives.

It does not take a disruption or an accident to realise that inefficiencies and risks within the supplier base are always in striking distance and that the existing internal data offers very little defence. Yet, from time-to-time, the grim reminders make you feel that the situation is just that. Investing at the outset in supplier enrichment solutions to gain all-around visibility is no longer a choice for enterprises. It is an imperative.

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